Proposal 5 would have established mandatory school funding levels on annual basis in Michigan.

Other aspects of Proposal 5 include:

Increase current funding by approximately $565 million and require State to provide annual funding increases equal to the rate of inflation for public schools, intermediate school districts, community colleges, and higher education (includes state universities and financial aid/grant programs).

Require State to fund any deficiencies from General Fund.

Base funding for school districts with a declining enrollment on three-year student enrollment average.

Reduce and cap retirement fund contribution paid by public schools, community colleges and state universities; shift remaining portion to state.

Support

Any pension requirements above 14.87% will be paid by the state, saving the district $465,000 a year

An increase of by-pupil funding

For schools with declining enrollment, a three year average will be used

If there are deficiencies to pay for the mandatory increase, it will be covered by the State's General Fund

If this is not passed the budget must be cut by $3 million through employee layoffs and program eliminations[2]

Opposition

Michigan Catholic Conference

The Michigan Catholic Conference opposes Proposal 5 due to its "potentially devastating effect on state programs and services that assist Michigan's poor and vulnerable population, as well as its failure to address the real needs of public school students."[3]Other arguments the group noted include:

The requirement to either raise taxes or cut other state programs

Alleges the only intention is to increase pension benefits.

No accountability on how the money is spent

Only monetary requirement written in the initiative is $380 million for pension programs

Would require 3/4 majority vote by both the House and Senate to change the amount of funding if the bill passed.

Political Community

Proposal 5 would leave lawmakers with less flexibility during future declines in state revenue growth.

Proposal 5 would provide lawmakers an incentive to cut state spending on certain primary and secondary education programs, such as adult and vocational education, by an estimated $141.7 million in fiscal 2007.

Tax increases could also be used to raise some or all of the first-year spending required by Proposal 5.

Economist Richard Vedder recently found no association between state spending on higher education and economic growth, and thereforee no support for increasing education cost.